Lafarge innovation and performance plan
Featured in12 June 2012 - 18:12
Company announces four-year plan to help drive sales growth, cash flows and returns
FOLLOWING the implementation of their new organizational structure, Lafarge have announced a four-year plan (2012–2015) to drive growth in sales, cash generation and return on capital employed through innovation, performance actions and dynamic portfolio management.
The plan aims to fully support Lafarge’s short-term objectives to significantly reduce debt and reinforce their financial structure, while further driving the Group’s industry leadership position for customer solutions and operational performance.
Guidance already announced for 2012 for market volume growth, pricing, cost savings, capital expenditures and divestments remains unchanged by the plan.
Highlights of the plan include:
- Cost savings of €1,300 million over the four years 2012–2015, of which at least €400 million will come in 2012 and at least €350 million in 2013.
- Sales growth and higher margins generating EBITDA improvement of at least €450 million by extracting more value from existing locations through innovative products and solutions, deeper penetration into specific market segments, services, and commercial excellence.
- Net debt targeted to fall below €10 billion as soon as possible in 2013 through cash-generation measures and dynamic portfolio management. No later than 2015, the Group plans to achieve a ratio of cash flows from operations to net debt of 28% to 30%.
- Innovation and cost-savings actions, combined with less-intensive capital expenditures and dynamic portfolio management with no major acquisitions, is targeted to increase return on capital employed after tax to above 8% in 2015.
Bruno Lafont, chairman and chief executive officer of Lafarge, said: ‘The plan we are presenting today will quickly drive higher returns for our shareholders, significantly strengthen our financial structure, and show our clear leadership ambition.
‘Our main growth avenue in the coming years will clearly be to extract maximum value from our current asset positions. During the recent past we have built a balanced portfolio of high-quality assets weighted to growth markets.
‘We will penetrate these markets more deeply by addressing the changing needs of customers by introducing new innovative products, new construction solutions and higher levels of service. Also, through productivity improvements and less-intensive capital expenditures, we expect to generate higher returns from these existing positions.
‘While we anticipate a demanding economic environment, we are confident that the actions we are taking will help drive sales, cash flows and returns.’